Thank you for standing by, and welcome to the Autosports Group Limited H1 2023 FY results. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the one on your telephone keypad. I would now like to hand the conference over to Mr. Nick Pagent, Managing Director, and CEO. Please go ahead.
Thank you everyone and good morning. Welcome to the investor presentation of the financial results for Autosports Group for the first half of the financial year 2023. My name is Nick Pagent. I'm the CEO of Autosports Group. Joining me on the call today is Aaron Murray, the CFO of Autosports Group. This morning, we'll start with a short presentation on Autosports, covering the first half of the 2023 financial year. An update on Autosports Group's growth strategy and the market conditions. A summary of the H1 2023 financial year trading results. Aaron will review the financial metrics of the business. Following the presentation, we'll open up the call for any questions that you may have.
Of course, as always, as we move through the presentation, which was launched this morning with the ASX and indeed also on Autosports investor site, I will, where possible, call out the relevant slide number. Starting with slide number 3 in the presentation, I'm pleased to report that Autosports Group has delivered a strong financial, strategic, and operational result over the first half of the 2023 financial year. The result has been driven equally by strong operating performance, driven by demand level organic growth, and the impact of strategically aligned acquisitions. Through the course of the first half of the 2023 financial year, our statutory net profit before tax was up 70.8% to AUD 35.1 million. Total revenue was up 16.6% to AUD 1.062 billion.
Normalized net profit before tax grew 32% to AUD 52 million. Operating cash flows were up 62.4% to AUD 59.4 million. Gross profit generation inside the business was up 26.4% to AUD 220 million. The combination of growing operating profits, strong cash flows has allowed Autosports Group to raise its interim dividend to shareholders by 28.6% to AUD 0.09 per share. We move to slide number four to look at the strategic highlights from the first six months. Of course, Autosports Group continues to deliver consistently on its strategic objectives. It is the consistent application of our strategy through our operations, our capital management, and our operations on a day-to-day basis that underpins our growth.
In the first half of the 2023 financial year, it was no different in this regard. EPS accretive acquisitions, unlocking organic growth, improving shareholder returns, and, where possible, targeted acquisitions of strategically important properties. In the first half of 2023 financial year, Autosports Group made acquisitions to drive EPS accretive growth. In August of 2022, we completed the purchase of Auckland City BMW Group, which added two BMW, two MINI, and a Rolls-Royce dealership to the network. In December, we announced the acquisition of the Motorline and Gold Coast BMW and MINI businesses. This business settled on the first of February of this year and added a further two BMW, two MINI, and two specialist BMW panel businesses to the network. The combination of these acquisitions at approximately AUD 400 million in annualized revenue to the Autosports Group from acquisition-led growth.
Strong underlying demand has continued to accelerate our organic growth. New vehicle revenue, adjusted for the impact of agency, delivered underlying growth of 14.7% in the six-month period. Service and parts divisions grew on a like-to-like basis by 21.1%. New vehicle orders continued to outpace customer deliveries, with our order bank growing at 14% over the last six months, net of any cancellations. Shareholder returns continued to grow during the period. Our capacity to generate strong growth and improve shareholder returns is driven by strong operating cash flows, which were up 62%. The interim dividend, as I mentioned, up 28%, which gives us an annualized dividend per share compound annual growth rate of 28.3% since we listed in 2016.
In property acquisitions, in August of 2022, we announced that we had entered a contract to purchase our important Fortitude Valley site. This property is due to settle in June of 2023, and will, on completion, bring Autosports property portfolio to just under AUD 200 million. Which brings me to slide number five, the outlook for the 2023 and into the 2024 financial year. The full year cycling of our acquisitions will continue to drive growth well into the 2024 financial year. Our growing order banks and resilient luxury demand is expected to exceed our vehicle supply rate through the second half of FY23 and into FY24. Service and parts should maintain an underlying like-for-like organic growth rate of just under 10% per annum.
We will open the greenfield BMW and BMW Motorrad site at Ringwood, which will supplement our organic growth. The site opens in March of this year, and will be a strong contributor in FY23. Despite inflationary pressures, our revenue growth should maintain the group's operating leverage during the period. I move now to slide 7 to talk about our growth strategy, starting first with our strategy to grow via acquisition. Autosports growth strategy continues to be underpinned by acquisitions. The automotive market remains fragmented. Consolidation continues to gather pace in the industry. Within this framework, Autosports Group's scale, strong cash flows, and deep OEM relationships gives us the opportunity to continue to grow by acquisition. Our record here is good.
Since listing, we've made 12 acquisitions in six years. We continue to look for future-ready brands in high volume potential locations. Businesses with high margin potential, businesses that are capable of improvement, businesses that can unlock synergies within the group. Our acquisitions in FY23 are quality assets on strategy and immediately EPS accretive to the shareholders. On slide 8, we have a summary of the additions of the Auckland City BMW Group and the Motorline and Gold Coast BMW Groups. They bring luxury brands to our portfolio. They give us major city representation in Auckland, Gold Coast, and South Brisbane. They enhance our dominant position within the luxury market. They are EPS accretive, they've got strong margin profile, they add significantly to the scale of Autosports Group.
They demonstrate Autosports' ability to execute its consolidation strategy and form the first part of our consistent growth strategy. I'll move to slide number nine to look at our organic growth strategy. Unlocking organic growth forms the second part of our operational strategy. We do this evenly across all revenue drivers. Firstly, for new vehicles. The prestige and luxury segments are supported by large order banks, tight supply, and resilient consumers. In the first half of FY23, Autosports' new vehicle revenue grew by 11.8%. As with each of the main revenue drivers, growth was driven both by acquisition and organic growth. Organically, the underlying growth was 14.7%. Our order bank grew 14%. Our margins remained stable. This demand, importantly, continues into January and the start of February.
In January, we saw our order rate grow by 17% versus the PCP. 13% of that was like-for-like growth. New vehicle revenue growth through FY23 and FY24 will further be supplemented by the acquisition of the Motorline and Gold Coast businesses which settle in February, and the organic growth that will come from our brand new greenfields, Ringwood BMW and Motorrad dealership, which, as I said, opens in March next month. I move to slide number 10 to look at used vehicles. Used vehicle revenue grew for the group at 19.8% in the first half of the 2023 financial year, driven evenly between organic and acquisition-led growth. Organic growth of 11.1% was in line with our forecasts of 6%-9% growth. We continue to play to our natural competitive advantages in used vehicles.
Principally, sourcing the vehicles with the highest margins via trade-ins, maturing finance contracts, and OEM fleet sales. Doing this allows us to maintain maximum margins and not to get caught in any falls in the used car market. Our inventory is tight. Our stock turns has improved in the last six months, and stock aging is very tightly managed. We expect the used car revenue to track our organic new car revenue growth into the future. Moving to slide number 11 to talk about organic growth in our service and parts divisions. Back end service and parts revenue grew strongly in the first half of the 2023 financial year, again, on the combination of acquired growth and organic growth. Organic growth of 21.1% was well ahead of our forecast of 6%-9%.
While some of this growth was gained from the cycling of the Q1 2022 lockdowns in New South Wales and Victoria, most of it was driven by strong underlying demand. Over the course of the first half of 2022 financial year and the first half of 2023, Autosports Group invested heavily in service capacity to unlock this growth. We invested heavily in our BMW Melbourne facility, our Alexandria facility, in our super luxury brands and our Ducati business. We unlocked a further 29 active service halls during that time. Why did we do that? Well, quite simply, it makes financial sense. It's a stable revenue stream. It's defensive in downturns. It's growing in 1 year behind the growing new car market, so it will grow into the future.
It does have materially higher margins and a strong payback on the investment. We're gonna do more of this to unlock further organic growth through the balance of the 2023 financial year and into 2024 financial year. BMW Ringwood, as we said, will add another further 28 service halls from March of this year. Indeed, we continue to invest heavily in our electric vehicle capacity, and that investment will be ongoing. Moving now to slide number 12 to talk briefly about our property strategy. Autosports Group's property strategy is set to support and enable our dealership growth strategy. As such, it sits fourth in our priorities for capital allocation behind dealership acquisitions, organic growth, and delivering strong shareholder returns. In FY23, in August, we announced the purchase of our important Fortitude Valley site.
That site is important to us because it controls one of our most important at retail sites, our biggest, our biggest lease with purpose-built facilities, with facilities which have capacity to add additional luxury brands, facilities which allowed us to eliminate the external rents by moving our Lamborghini site into that Fortitude Valley site. On completion in June, will save us at a minimum, AUD 6.7 million in rent, assuming there is no CPI growth in the period. If I move now to a quick summary of the results before I hand on to Aaron. Slide number 14 on a financial summary. Revenue up 16.6%. Order bank in the business is strong, growing, and resilient. Net profit before tax up 32.6% during the period.
1% improved operating leverage for the business, which has now grown to 6.3% margin at EBITDA, despite the impacts of inflation, despite the impacts of agency. What it shows is our scale operation is improving in opportunity and improving in operating leverage as we grow the business. The cash flow and cash conversion of the business remains high, which allows us to pursue all three of our priorities in terms of growth. The normalized financial results on page number 15 shows revenue for the business up AUD 152 million, it shows nicely that even split between organic and acquisition growth. Acquisition growth of AUD 72.3 million in Auckland and AUD 79 million in like for like. Gross margins grew, as we said they would do in our outlook statement in FY22, to 20.8%.
They grew on stable vehicle margins, improving service and parts revenue, and the impact of the accounting treatment of the agency system. OpEx was well controlled in an inflationary environment. Organic OpEx was in line with the second half of FY22, plus the acquired OpEx of AUD 8.1 million from Auckland City BMW. I move to slide number 16 to touch on the statutory result. The statutory result was clean. The statutory result was in line with the normalized result. The net profit before tax was AUD 51.3 million plus 63%. Net profit after tax was AUD 35.1 million, up 70%. The EBITDA reflecting the impact of AASB 16 was AUD 89.8 million, up 66.4%. Earnings per share were up 71.8% during the period, and dividend per share, as I've mentioned, was 28.6%.
It is a nice clean result with very few normalizations running through it. I'd like now like to ask Aaron to share some detail on our H1, 2023 financial metrics, including our revenue and margin drivers, operating leverage improvements, cash flow, and balance sheet. Aaron?
Thanks, Nick. Good morning to everybody on the call. If we turn to slide 18, revenue drivers. Historically, ASG has achieved consistent revenue growth through a mix of organic and acquired revenue. In the first half of FY23, ASG achieved revenue growth of AUD 151 million on PCP, with the growth being split almost evenly between organic and acquired revenue. Pleasingly, a significant increase in organic new vehicle revenue will continue to assist revenue flow through to the high-margin service and parts departments in the years to come, as clients return to service their vehicles. Organic revenue on new vehicles was up AUD 82.8 million on PCP prior to an adjustment of approximately AUD 60 million due to the impact of the Mercedes-Benz agency sales.
New vehicle growth supported the used vehicle department with additional trade opportunities, resulting in organic used vehicle revenue improving by AUD 23.1 million on PCP. Organic revenue in our high-margin service and parts department increased by AUD 25 million on PCP. On top of the organic revenue growth, our first half acquisitions contributed an additional AUD 72 million of revenue in the first half. ASG's second half of 2023 revenue drivers will be supported by the strong underlying new vehicle order bank, cycling of Auckland City BMW and Motorline BMW acquisitions, and the opening of the Ringwood BMW greenfield dealership. We turn to slide 19, gross profit margin overview. ASG's gross margin continues to improve.
Gross margin has been supported by historical and continued acquisitions of assets that present high-margin opportunities, increased revenue through high-margin service and parts departments, and favorable new and used vehicle market conditions. Margin has improved from FY16 of 14.5% to 20.8% in the first half FY23. We move to slide 20, operating leverage. Total operating expenses for the first half FY23 are AUD 153.7 million against a PCP of AUD 125.9 million. Acquired expenses make up AUD 8.1 million of this increase on PCP.
Given the first half of FY22 was impacted by lockdown and operating on a subdued expense base, we've included a more accurate comparison of our like-to-like growth in operating expense by comparing the movement to the second half of FY22. Given the current inflationary environment, ASG has managed to maintain its like-to-like operating expenses at 7% higher than the second half FY22. Included in this is an increase of 8% in employee costs, 13% in occupancy costs, and 2% in other expenses. Changes to the Mercedes-Benz operating model have resulted in both higher gross profit and operating expense margin percentages, this has limited impact on overall operating leverage. Historically, ASG has implemented disciplined expense reduction strategies through focused site rationalization by property acquisition and dealership consolidation to reduce occupancy costs.
This discipline will continue across our recent acquisitions and, where possible, with further property acquisitions. We move to slide 21, margin overview. Historically, EBITDA and PBT margins have been impacted by acquisitions that were running with higher OpEx margins than the wider groups. The OpEx improvements in acquired sites and the strategies implement in improving our OpEx has driven improvements in the group's EBITDA and PBT margins. In the first half of FY23, EBITDA margin has improved to 6.3%, and PBT margin has been maintained at 4.9%. Margins have been impacted positively by favorable market conditions, improved site utilization, improved property portfolio, lowering occupancy costs, and strong capital management, minimizing the impact of recent interest rate rises. We turn to slide 22, cash flow. ASG is a capital-light business that generated strong operating cash of AUD 59.4 million.
The strength of the cash generation in the business allows ASG to follow its capital management plan by growing through acquisition, investing in facility improvements, and expansion to capitalize on organic growth, and to deliver strong shareholder returns and a strategic investment in property. In H1 FY23, ASG spent AUD 51 million acquiring the Auckland City BMW business. We applied almost AUD 16 million to support organic growth across multiple locations within the group and have declared a fully franked interim dividend to be paid of AUD 0.09 per share, which is 28.6% up on PCP. Already completed for H2 FY23 is AUD 36 million for the settlement of Motorline BMW. We've allocated AUD 20 million for the June settlement of the Fortitude Valley property that houses our Audi, Lamborghini, Bentley and Maserati franchise in Brisbane.
Moving forward, ASG investors can expect to see ASG apply the same capital management strategy. Turn to slide 23, balance sheet. ASG's net debt excluding floor plan finance closed at AUD 71.3 million with a total corporate debt of AUD 118.3 million, with AUD 40.4 million relating to goodwill, PPE and insurance premium funding, and the remaining AUD 77.9 million relating to AUD 98.2 million of real estate at written down value. ASG's inventory increased by AUD 69.5 million on June 22, with the increase coming through AUD 22.5 million from acquisitions, AUD 56 million in like-for-like new vehicle inventory, and we're down AUD 9.8 million in like-for-like used vehicle inventory.
ASG continues to have supportive OEM financiers with 98% of ASG's corporate debt and 100% of balance finance funded by our OEM financiers. With that, I'd like to hand back to Nick.
Thanks, Aaron. Just a quick recap from me before I drive the line open to questions. In the first half of 2023 financial year, we saw revenue grow on the back of organic and acquisition growth. The order bank for new vehicles continued to be strong and grow at 14%. It's a resilient order bank, and the luxury consumer continues to be resilient. Gross profit grew strongly during the period to AUD 220 million. We improved our operating leverage by 1% in the group as scale improvements worked through the system. We improved our shareholder returns, and we continued to invest strongly in acquisition-led growth. The outlook for the business, therefore, is also good. We have full year cycling of the acquisitions that we've already made continuing through the FY23 and FY24.
We have organic growth coming through in our new car sales department with supply returning to the market. We have underlying growth in service and parts, which should continue around that 6%-9%. We've got quality greenfield sites coming through with our Ringwood BMW dealership and Motorrad site, which has opened this month. We should be able to continue to maintain our operating leverage as our revenue grows during this period. Again, our strategic priorities that Aaron mentioned will continue into the period. Growth by acquisition, continued investment in our organic growth, quality shareholder returns, and if we can and if it's right, growth in our property portfolio. I'd now like to open the line up for any questions that anyone may have.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tim Plumbe with UBS. Please go ahead.
Morning, Nick and Aaron. Really strong result, particularly operating result. Can you just maybe give a sense on what you're expecting in 1H, 2H in terms of seasonality? I think late last year you were expecting, you know, a stronger second half. Is that still the expectation?
Tim, on an organic basis, we continue to believe that the second half is in that range of 52%-55% of the full year. Traditionally it's fallen within that range. We will also have the momentum which sits behind the acquisitions sitting there in the second half as well, particularly the February acquisition of the Motorline business, which it wasn't reflected in the first half. Yes, normal seasonalizations, Tim, on an organic basis, plus the acquisition of the Motorline business.
Thanks for clarifying. Sure. Sure. Sure. It's organic. Second question, just on the January trading update for new vehicles, like for like at 14.7% acquisition led growth 7.7%. Within the like for like number, the Mercedes has been normalized completely, or is there sort of a, like a AUD 10 million difference we need to account for in the PCP, AUD 60 million versus AUD 50 million?
No, it's been totally normalized because the PCP that I'm comparing with is the second half of FY22. There was no agency in place at that stage. It's completely normalized out through this period. There might be AUD 1 or AUD 2 million that's gone through in old-fashioned dealership sales through this period.
Okay. Got it. The acquisition led growth is 7.7%. That's just one month of Auckland BMW that wasn't there in the PCP.
Oh, sorry. On the January order, right. If you're referring to the January order, right, Tim. January order, right, was up 17% and 13% of it was like for like. 4% of the increase was driven by Auckland.
Right. The first bullet point there, is that revenue?
Which bullet point you're referring?
Under the January update on slide 9.
The January That's an overall number, I believe, from the previous period, so probably shouldn't be in that line.
Is that revenue, sorry? We can circle back on that's okay.
Yeah. circle back on it. No, the first point is a first half number, not a January number.
For the acquisition-led growth, 7.7%. For acquisitions so far in the second half, there's only 1 month of Auckland.
That's right.
[inaudible]. Is that correct?
That's correct.
Okay. Got it.
Um, just-
Got it.
That point does relate to revenue, the top point.
Okay. Got it. Thanks for clarifying. Just a question on inventory. Just looking at your inventory, as at December, you know, the turn's probably slowed a little bit if we compare it to COGS or revenue and I think you said used inventory sort of down a bit suggests that new vehicle inventory's lifted a fair bit. Can you maybe comment on what the turn sort of looks like? Then maybe we can relate that into sort of the step up in bailment financing costs, how much effective interest you sort of had flow through from rate rises so far, in that first half in the December half, sorry.
Overall, our stock went up by AUD 60 million during the period, and our revenue went up by AUD 150 million during the period. What we continue to see through the period will be actually stable stock turns. It has drifted a little bit towards new vehicle stock. Partly, that is because we've kept a very, very close eye on our used vehicle stock. Secondly, that is because we've been able to replace some demonstrators because we've had a little bit more in terms of available stock coming through. We held them as used cars in the previous period, and we're cycling them back into demonstrators right now, Tim.
Overall, I expect our stock turn based on, based on our revenue to continue to be about the same. We will continue to go up in new car stock as our revenue grows.
Okay. That's understood. Helpful. That's helpful. Thanks. Just one last one before I jump back in the queue. Maybe just some comments around your expectation on OEM supply heading into this calendar year. I mean, it's been, different OEMs, it's been quite choppy month to month, particularly across someone like BMW. Maybe can you just give us a quick rundown in your key brands, what your kind of expectations are for supply the next 6-12 months?
Yeah. Tim, firstly, if I took a line through the market, I'd say that most brands were looking for about a 10% growth through this year. However, given the given the problems running in transport for the first 2 months, I think they're all running behind that already. We're looking for in my view, low single-digit growth overall in the market. It'll be up and down during the period, but we're looking for that sort of growth. I think, from what I'm seeing, I'll get improved supply from my most undersupplied brands last year, which included Audi, included Land Rover, included Volkswagen. I'll get solid supply through in Mercedes-Benz and BMW, and that's the bulk of my volume and my profit generation. Those brands will have supply at absolute level.
That's great. Thanks. I'll leave it there.
The next question comes from James Ferrier with Wilsons. Please go ahead.
Morning, Nick and Aaron. Thanks for your time today, and congratulations on the result.
Thanks, James.
Can I ask you, can I ask you first of all, just around the inventory levels, just following on there from Tim's earlier question? The bailment drawdown, there was an increase of AUD 60 million there. How much of that was in relation to the Auckland acquisition versus the drawdown for the like-for-like business?
Yeah. It's about AUD 55 million, sorry, not AUD 55 million. About AUD 25 million relates to Auckland. We did draw down some used car bailment because we had an equity in used inventory when we settled Auckland rather than borrowing for goodwill because the rate's significantly cheaper.
Got it. Okay. Yep. The balance, sort of AUD 35 million is essentially a like-for-like increase in bailment.
Yep. That's fair, James.
Yeah. Okay. Terrific. Thank you. Just on the gross margin result, I mean, outstanding result there. The comment on page 15 of the presentation refers to that gross margin, refers to stable vehicle margins in the period.
Yeah.
I don't wanna get too granular, but just interested, just given it's such a strong result, but is that a like-for-like reference? Because obviously Auckland would have lifted your vehicle margins. Is that reference to stable margins a like-for-like, or does that mean Auckland bumped it up and the like-for-like went backwards?
That's it. That's getting very granular there, James. The Auckland vehicle margins aren't a lot higher than we achieve in Australia. It's just the Auckland net margins are higher than we achieve in Australia because their operating expenses are lower. On the first point. The second point is, new vehicle margins have been very, very stable during the period. We have had a slight paring back of used car margins. Mostly that's in relation to a recalibration of used car values over the last six months. I think that's no surprise to anybody. The point that I'm trying to get out in this area is that we've got stable vehicle margins. As we improve our mix, that continues to grow.
On a structural basis, new margins at the gross level will continue to be higher than they were pre-agency because of the impact of the agency accounting treatment. That'll indeed flow through on the other side to a higher OpEx ratio because we don't have that revenue on the other side. Structurally, when you put together your models, we're going forward into the future, we'll have structurally higher gross margins and a slightly higher structural OpEx as a consequence of the agency accounting treatment.
Yeah, that's very helpful detail. Thanks, Nick. I think, you know, the outcome you've achieved on used cars in that period is a pretty robust outcome relative to market we'd expect so. Well done on that front. Last question I had was in relation to OpEx, and it was sort of helpful that detail on slide 20 there. I'm just trying to better understand in that red box where you're showing the like for like increase in OpEx, first half 23 versus second half 22. Employee costs up 8%, so half on half. Effectively that's annualizing at sort of 16% and occupancy at 13%, so annualizing at 26%. That seems sort of surprisingly high for what looks like pretty stable like for like costs. Am I misinterpreting that?
The employee costs have been basically driven by inflationary and salary adjustments and also higher commissions that are attached to the higher gross profit margin we're achieving. You can see the gross profit margin also went up significantly. Our occupancy costs relate to a turn of leases and rental increases that have been written into the lease agreements. James, you're misunderstanding. Those growth rates are growth rates that you can expect on an annualized basis.
Annualled, yeah. Okay. Okay.
Yeah.
No, I won't do that. That's, that's helpful. Thanks, guys. Appreciate your time today.
Thank you.
Your next question comes from Matt Johnston with Jarden. Please go ahead.
Good morning. Morning, Aaron. Can you hear me?
Yes, we can, Matt.
Maybe just a quick one for me, just around Mercedes. Obviously, you've given us the revenue impact, but can you comment on, I guess, how volumes are tracking and I guess, maybe the secondary question, customer experience, under that new model?
Right. Customers are buying under the new model. That is clear. The Mercedes-Benz volumes for last year tracks the broader luxury market. In terms of pushback from the consumer, there's not tons of pushback from the consumer on the new model. I will say, however, that in the changeover of any new model, there is teething problems on the way through. It's a huge amount of volume of work that Mercedes-Benz have taken on in taking all the transactions in-house, and at different times, individual experiences may be clunky on the way through, Matt. I know they'll work on that, and you couldn't actually expect them to get that perfect in the first 12 months of a new operating system.
From a consumer side, it is working, okay, in line with our expectations. There are the glitches that we thought we would have during the period. You know what? On the dealer side, we don't always get everything right from our side as well. Overall, there's work to do here, but we're on the right track.
Yeah. I might just have another follow-up question there just around, I guess, the sales staff, how are they going or have you recalibrated some of the sales staff into other brands?
We haven't recalibrated very much at this stage. At this stage, Matt, that remains a task for us over the next 12 to 24 months. The fact of the matter is, we have been, we have felt it was better on a consumer basis to maintain all our staff levels, maintain the way we pay our staff on the way through, maintain the Mercedes-Benz brand knowledge within the network during the changeover, and also to make sure we looked after our staff because they looked after us incredibly well during COVID. We haven't made many changes on that front. Those operating changes remain tasks for us over the next two years.
Okay, great. Then maybe now moving to the acquisition. With the Motorline BMW, you've got a new debt facility. Can you clarify how much debt was taken on that transaction?
Yeah. Absolutely. Firstly, we had that very clearly out in our settlement note to the market at the start of February. The acquisition was approximately AUD 66 million to settle everything. You know, we took a AUD 30 million debt facility related to that, and the rest of it, we settled in cash. Yes, that's an additional debt facility inside the business.
Okay. Obviously for the Fortitude Valley property site, is it likely that you'll need more debt financing for that?
Yes. Again, exactly the way that we've, we announced it in August, we're going to take about 80% debt on that property. It's already been approved with Volkswagen Financial Services on the way through, so our OEM financier. Our view with property is that the best way that we can unlock value for our shareholders is to use OEM debt on property, have it as capital, as capital neutral or as cash flow neutral as possible. That's why we're noting the substantial rent that we are eliminating when we take on that property. We will take about 80% debt on that property.
Okay, great. Just a follow-up there, just in terms of, I guess, the net gain versus the AUD 6.7 million of rent savings you called out versus the interest. Can you give a lot any detail there?
Yeah. We put that detail in. The fact of the matter is, Matt, I was more concerned looking over the next couple of years on the CPI impact than I was on interest rate impact. I think it's a property which was generating, as you can see, just on about a AUD 0.07 yield. It's got strong financial matrix behind it for the shareholder.
Okay. Thanks, Nick.
Your next question comes from Brendan Carrig with Macquarie. Please go ahead.
Good morning, gentlemen. Just a couple more questions from me. Just on the order book, obviously a strong outcome with it continuing to grow at that 14% number. Can you just talk to the profile of that order book growth? Has that been pretty stable through the half or was that sort of more skewed to the beginning of the half and then the rate of the growth in the order book has started to slow as the period progressed?
Brendan, it's certainly not slowing. It's in fact through January and the start of February, the difference between order bank and deliveries has increased. Partly, of course, I think this is the fact that the luxury segment has probably been more undersupplied than the rest of the market. We saw that in the VFACTS numbers through the course of last year, that it grew at a lower rate than the rest of the market, and that was probably mostly supply-driven rather than order rate-driven. What we see is that growth rate maintaining or even increasing at the moment. We're seeing our top-end consumers, particularly the people buying AUD 100,000 plus cars being incredibly resilient.
We're seeing our inquiry levels coming through prior to the orders, growing as well during January and February. We feel pretty positive about the underlying consumer right at the moment in the luxury segment.
Okay, that's clear. I guess maybe that follows into the sort of cancellation rates. You did say that the order book is net of cancellation rates.
Yeah.
Has that been pretty stable or has that started to tick up a little bit? Has anyone been citing sort of interest rate pressures or anything like that as the reason or yeah, how's that performing relative to your expectations?
Yeah. That's not yet pushing the interest rate question on the way through. What we're seeing is that normal fall over rate around 4%. Mostly we're seeing people when they cancel, not canceling a car totally, but moving their car to a car which might be able to be delivered slightly earlier. In that regard, we've seen movement within our order bank rather than cancellations of the orders. It's pretty resilient on the way. I thought it was important to go and let you guys know that the growth was net of cancellations because we watch that very closely and when we give you the data, it's live growth.
Okay, that's clear. Then the last one, just to follow up from Matt's question or a bit more detail. Just on the agency side of things, obviously the revenue numbers are there. It sounds like you didn't pull any levers on costs at this point in time, but maybe that's a project for the next, you know, the next one or two years. Are you able to give any more detail on what the impact from the shift to agency had on the profit line? Then I guess, have you then started to think about if there was a negative impact on profit, you know, what you can do to get that to be a more neutral impact over, you know, the next one or two years?
Yeah. I'll answer this in two ways. Firstly, I'll say I'm not gonna give really granular detail on any individual franchise and the profit within any individual franchise. I would say over the last six months, our operating leverage grew by 1%. It's going quite well in terms of margin and expenses on the way through. The second thing I would say is there is no doubt. That we, on a granular basis inside the Mercedes-Benz business, can work particularly on two elements. We can work on being more efficient in the way that we sell cars. With Mercedes-Benz, as I noted, we can work on the system there, the efficiency of the system, and how that works through the consumer.
That will help us increase the sales rate within that level, which is the biggest driver, of course, of operating leverage. The second thing is we can do, is work on that expense line and the efficiency of our people. We can work on that in conjunction with Mercedes-Benz as we get to learn the system a little bit better. We've got opportunities on both sides within the Mercedes-Benz business. Overall, within our portfolio of brands, what we're seeing is our scale continuing to unlock operating leverage within the business.
Okay, that's clear. I'll leave it there. Thanks very much.
Thank you.
Your next question comes from Sarah Mann with Moelis Australia. Please go ahead.
Morning, guys. Sorry to keep asking questions on the order write, but just the 13% like-for-like order write improvement in January is obviously pretty good. Just wondering if that's related to, I guess, January last year kind of being weak. Therefore, if you could maybe give us any color around, like, what order write looks like relative to, say, kind of October, November, December in January.
It's really difficult to do that effectively because of seasonalization. January's a short retail month because we start a little bit later from when people come back from work. I think January on January is the right comparison. You're right, January last year was a weaker month because we were affected by Omicron in January. I take your point. The best thing that I can say is that it was our biggest January order write ever. I get that we've cycled over acquisitions over the years, but it's our biggest January order write ever. February has started at a bigger organic order write growth than January did last month.
All right. That's helpful. Then just in terms of F&I mean, you kind of touched on it in the question before about cancellation rates. Like, have you seen any signs of your financiers kind of, I don't know, tightening credit conditions, and therefore, you know, that impacting some of your customers' ability to kind of get finance either on new or used?
Sarah, there's no doubt that they are doing that. There's no doubt that that will impact on the car market. My view is that it's a far lower potential impact in the luxury market, where headrooms are bigger and the luxury consumer is more resilient. I also think this is a very, very strong area of our business because of our association with the OEM financiers. The OEM financiers are likely to be the slowest to raise interest rates because they're also trying to maintain vehicle volumes as well. Through this period, being 100% with OEM financiers is very strong and being in the luxury segment is an advantage for us.
Effectively you're saying there's been no impact on tighter credit conditions, so far on being able to kind of sell cars, essentially?
Yes. Not on, not on, not on our consumer at the moment.
Yep. Got it. Okay, great. Then the other question is just on property. Clearly you've got the big Fortitude Valley acquisition coming up. Are there other properties that you're currently leasing that would make sense for you to acquire? How do you think about, you know, which ones would be the right ones to acquire and when you might do that?
The short answer is yes, there is quality properties that we lease at the moment that would be effective for the shareholders to own. The way we would look at it, particularly at the moment, is it would need to be a property that we lease on a pretty sizable yield for it to be cashflow as close as we can get to cashflow neutral to pick it up. Property, the property growth path that we've got here, the property growth strategy that we've got, clearly in our priorities sits fourth. We don't want property growth to take cash away from us to buy car dealerships.
We don't want it to take cash away from investing in the organic growth. We don't wanna take the cash away from our ability to give strong shareholder returns on the way through. It sits as the fourth priority. There is plenty of us to do there, but what we'll be prioritizing in that area, if we have the spare cash available, we'll take high yielding showrooms that are not properties that we believe are very important for us into the future.
Excellent. All right. Last question from me, just on the topic of dealership M&A. Can you give us a bit of a description of what the activities or what the activity level is at the moment out there in terms of potential acquisitions and also lender expectations relative to what you think is good value?
Yeah. We haven't noticed a sizable uptick or downtick in M&A activity or the availability of it. There still continues to be more available than we can ever execute on at the moment. We think that if we look at current vendor expectations, they are, they have, where we've transacted, been at a reasonable level, a level that we think is reasonable. We think that they have to be at that reasonable level and that if they really want to transact, if they're just making an ambit claim, they'll put a multiple on their business which is far too high.
The second thing I'd like to say in this area, Sarah, is the scale of our business has changed so fundamentally since we listed, that the type of acquisitions that we can now look at are totally different to the ones that we were limited to in 2016. We're limited to smaller acquisitions, and now we can start to look at acquisitions with more than AUD 250 million in revenue, and we can execute them based on the cash flows of the underlying business. That brings us into a slightly different territory, and we think the further up that territory you go, sometimes the better value you can unlock.
Excellent. Thanks very much.
Once again, if you wish to ask a question, please press star one on your telephone. We'll now wait momentarily for questions to be raised. There are no further questions at this time. I'll now hand back to Mr. Pagent for any closing remarks.
Thank you, everybody, for joining us today on the investor call. Just before I finish, I'd just like to, as always, give huge thanks to the Autosports Group staff who delivered this outstanding result, to thank our OEM partners for their support during the period, and indeed, thank our shareholders for their support during the period. Thank you for listening, and I look forward to any other questions over the next couple of days on the Autosports Group result. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may now disconnect.